BENCH MARKING

By:
Anurag Gupta
IBS Kochi
 “Benchmarking is the
search for industry best
practices that lead to
superior performance”

by Robert Camp
 The Evolution of
Benchmarking
Evolved in the early 1950s, when W. Edward
Deming taught the Japanese the idea of
quality control.

Example


Toyota Motor Corporation’s following the

footsteps of Ford Motor Corporation with
the adaptation of the Ford’s Just-in-case
System into Toyota’s Just-in-Time System.
Term “Benchmarking” emerged in 1980s by
ROBERT CAMP, logistics engineer who
initiated Xerox’s benchmarking program.
Use of benchmarking worldwide continues
to grow since Robert Camp wrote the first
book on benchmarking in 1989.
 Benchmarking
Valuable TQM tool which accomplishes
objectives of customer satisfaction and
continuous improvement.
Motivates an organization & fosters a new
in-depth understanding about the
functioning of the organization.
Reduces cycle time as small or big tasks get
done faster.
Constantly redefines standards which must
be achieved to remain competitive.
Increases productivity.
 Benchmarking
process
Benchmarking
Standards
Benchmark Practices

Benchmark Gap How to close the

►How much Gap
► Where ►Improved Knowledge
► When ►Improved Practices
►Improved Process

Management
Commitment

Organization
Communication

Employee
participation
Benchmarking Process
Model

Adap Plan
t
Analyz Searc
e h
Observe
 Steps in Bench Marking
Process
1.
 Plan
• Select the process
• Form Team
• Understand & document process
• Establish performance measure
2.
 Search
• Listing Criteria for partner selection
• Conduct general / secondary research
• Decide the level to Benchmark
• Identify potential partners & contact
•
3.
 Observe
• Questionnaire sent to partner
• Telephone contact
• Direct observation / site visit
4.
 Analyze
• Sort information & data
• Quality control information & data
• Normalize data if necessary
• Identify gaps in performance Level
• Identify causes for gaps
•
•
5.
 Adapt
• Identify improvement opportunities
• Set target for improvement
• Develop implementation plan, monitor the
progress
• Write final report
•
Types Of Benchmarking
Internal
External
Performance or Competitive
Functional
Generic
Strategic
Process
 Internal Benchmarking
Comparison of similar functions in different
operating units within the organization
Example


• Tata Steel’s Colliery divisions

benchmarking their maintenance
practices with that of the Maintenance
division inside the Steel Works at
Jamshedpur.
 External Benchmarking
Comparison of organization functions and
key processes against external good
practice organization.
•
Performance or Competitive
Organizations using performance measures
to compare themselves against similar
organizations
Example

• FMCG’s comparing with each other for

Market share, Retention rates, profits,
costs.
•
 Functional Benchmarking
Comparison of similar functions against
external best in any industry
Example


• Hindustan Max – GB Ltd , a pharmaceutical

company, benchmarking their
maintenance function with that of Tata
Steel.
 Generic Benchmarking
Comparison of functions which are generic
in nature in any industry
Examples


• Hospital in the U.S. routinely benchmark

their patient management against
hotel’s guest management.
• Airlines benchmark their customers
service with 5 star hotels.
•
 Strategic Benchmarking
Used where organizations seek to improve
their overall performance by focusing on
specific strategies or processes
Example

• Benchmarking against organizations which

have won awards or some other
distinctions
 Process Benchmarking
Focus on specific operations or processes


Examples


• In higher education - Enquiry Management,

Enrolment
• In Logistics - Delivery, Safety.
• In hotels - Housekeeping, Customer Care.
•
 Issues in Benchmarking
Finding suitable partners.
Difficulties in comparing data (50% of
organizations found this)
Resource constraints (Time, Finance and
Expertise)
Staff resistance.
•
 XEROX Case
• Invented photocopier in 1959
• 1981, the company’s market shrank to
35%
• IBM, Kodak developed high-end machines
• Canon, Richo, and Savin dominated the
low-end segment
• Company was suffering from the “not
invented here” syndrome
 XEROX Case
Results included:


• Suppliers were reduced from 5000 to 300.

• “Concurrent engineering” were practiced.
• Hierarchical organization structure was
reduced
• Quality problems cut by two-thirds
• Manufacturing costs cut in half
• Development time cut by two-thirds
• Direct labor cut by 50 percent and
corporate staff cut by 35 percent while
increasing volume

Thanks…